Correlation Between BE Semiconductor and New Residential
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor and New Residential at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BE Semiconductor and New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BE Semiconductor Industries and New Residential Investment, you can compare the effects of market volatilities on BE Semiconductor and New Residential and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BE Semiconductor with a short position of New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and New Residential.
Diversification Opportunities for BE Semiconductor and New Residential
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 0XVE and New is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve and BE Semiconductor is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BE Semiconductor Industries are associated (or correlated) with New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of BE Semiconductor i.e., BE Semiconductor and New Residential go up and down completely randomly.
Pair Corralation between BE Semiconductor and New Residential
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to generate 1.16 times more return on investment than New Residential. However, BE Semiconductor is 1.16 times more volatile than New Residential Investment. It trades about 0.06 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.04 per unit of risk. If you would invest 6,466 in BE Semiconductor Industries on November 7, 2024 and sell it today you would earn a total of 5,549 from holding BE Semiconductor Industries or generate 85.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
BE Semiconductor Industries vs. New Residential Investment
Performance |
| Timeline |
| BE Semiconductor Ind |
| New Residential Inve |
BE Semiconductor and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and New Residential
The main advantage of trading using opposite BE Semiconductor and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor position performs unexpectedly, New Residential can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in New Residential will offset losses from the drop in New Residential's long position.| BE Semiconductor vs. Mobile Tornado Group | BE Semiconductor vs. Infrastrutture Wireless Italiane | BE Semiconductor vs. Alliance Data Systems | BE Semiconductor vs. Ion Beam Applications |
| New Residential vs. European Metals Holdings | New Residential vs. Hecla Mining Co | New Residential vs. Monster Beverage Corp | New Residential vs. Coeur Mining |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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